The world economy is the economy of all humans of the world and changed obviously over the past few years. Its growth is anticipated to middling from 5.9 in 2021 to 4.4 percent in 2022 and 3.6 percent in 2023.
The exchange of goods, services, technologies, production, consumption, and financial values is called economic activities and when conducted between nations and across borders called global economic system.
Increased in food and fuel prices, larger disruptions such as hunger, disease, war, and political unrest damages the global growth, added to inflation, hitting vulnerable populations in low-income countries and having a tremendous negative impact and slowdown in economy.
Global economy is governed and organized by unite nations and it refers to the interconnected worldwide economic activities. Before the goods and services can be exported or imported, currencies of at least two countries are involved to be exchanged. Exchanging of goods and services between different countries is considered the cause of globalization. sometimes, countries render barriers on the global trade of certain goods or services which often agitate the relations.
Population, technology, infrastructure, Labor law, human capital and natural resources are some of the key factors that influence and affect how well the global economy works. Whereas, Free trade, increased investment, movement of labor, increased economies of scale, are some benefits of a global economy which allows countries to specialize in the production of those goods in which they have a comparative advantage to lower average costs and lower prices for customers. Workers can look for jobs in other countries, if a country is going through a phase of high unemployment which further helps in reducing geographical inequality. it helps countries to attract short-term and long-term investment.
Increase in the world’s population has led to emerging markets increase in size and changing physically greater over a period of time, making them one of the primary engines of world economic growth. The standardization is recognized worldwide which helps countries to overcome problems associated with global trade and advancements in logistics have changed the face of global economics and trade.
Time and higher cost for shipping are the main differences in international and domestic trade for transporting goods across oceans and borders but with the ocean shipping logistics and advances in ocean freight transport, many of the problems are resolved. Global standardization of shipping containers have made the process of shipping much easier. Modern cargo ships can carry a lot of freight, reducing the cost of shipping.
A country’s wealth, standard of living, size of economy, international trade, economy produces per person and total market value of all the finished goods and services produced within a country is measured with the GDP (Gross Domestic Product which denotes the aggregate value of all services and goods produced within a country in any given year).
The foreign balance of trade for any country is very important and is evaluated in either U.S. dollars or in local currency. when the total value of goods and services that domestic producers sell to foreign countries exceeds the total value of foreign goods and services that domestic consumers buy called increase in GDP and vice versa.